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Net Income is the profit your business earns after expenses and allowable deductions. It represents the amount of money remaining after all operating expenses, Taxes, interest, and preferred stock dividends have been deducted from a company's total revenue.
The total revenue in an Accounting period subtracting (minus) all expenses during the same period. Net income is your actual Take-Home Pay after all adjustments.
The formula for net income is as follows:
Total Revenue - Total Expenses = Net Income
Net income is found on the last line of the income statement, which is why it's often referred to as the bottom line. Let's look at a hypothetical income statement for Company XYZ:
Inclusive | Costs (INR) |
---|---|
Total Revenue | 10,00,000 |
Costs of Goods Sold | 5,00,000 |
Gross Profit | 5,00,000 |
Operating Expenses | 2,00,000 |
Rent | 70,000 |
Utilities | 50,000 |
Depreciation | 50,000 |
Total Operating Cost | 3,70,000 |
Interest Expenses | 50,000 |
Taxes | 50,000 |
Net Income | 30,000 |
By using the formula we can see that:
Net Income= 10,00,000 - 5,00,000 - 3,70,000 - 50,000 - 50,000 = INR 30,000